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Opinion Paper. Strategy for carriers: How to transform into a digital operator

Opinion Paper Strategy for carriers: How to transform into a digital operator Table of Contents 1 Abstract Introduction Don t tell me what is cool Customer pain points Guiding principles...
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Opinion Paper Strategy for carriers: How to transform into a digital operator Table of Contents 1 Abstract Introduction Don t tell me what is cool Customer pain points Guiding principles Think digital first Create a consistent and transparent customer experience: One offer... One Customer Experience One process One Screen Start with the community: where customers share common interest and engage with the Brand Simplicity and Flexibility: subtracting the obvious and adding the meaningful Use Gamification How-to-Guide: Digital Telco Business design: Mobile Virtual Network Operator (MVNO) Customer experience design: Moments of truth and Customer Journeys Influencer the VIP for your digital Telco IT-Architecture design Social Engagement Tools Care and Support (Contact Centre, Self Care etc.) Billing and Charging: Online charging system Conclusion Table of Figures The Authors The Company Opinion Paper 2 Detecon International GmbH 1 Abstract MVNO, customer experience, social media and digital natives are terms on everybody s lips. In this paper, the authors analyze how these buzz words are connected, and highlight some strategic decisions you have to consider if you want to play in the digital space. We analyze the expectations of digital natives towards a true digital telco. This will be driven by a comparison between traditional brick and mortar telcos strategy and OTT companies strategy in a smart world environment. We will deduce a set of guiding principles for the overall customer experience. Based on these guiding principles, we will outline the new trends impact on the overall business architecture (customer journeys) and technology architecture (reference IT architecture). The challenge here is to leverage as much as possible of existing infrastructure without compromising on the overall customer experience: The customer journey spanning from discovery, join, use, support and exit have to be tailored to the customer experience the digital Telco wants its customers to have. In this context, it is also important to understand who these new type customers are and how to identify them. As a digital telco, IT is a cornerstone of the overall strategy whereas the network is the overall business enabler. We will outline the strategic IT building blocks of a digital telco leveraging existing network infrastructure elements of the traditional telcos (MVNO). We will show that a strategy for digital natives must be aligned in three dimensions: Business set up: A business set up, which allows quick response time, agile service deployment and nurture a different way to do business, to overcome long technology deployment cycles of traditional telcos. The way to do business: Both service delivery and corporate culture have to be radically rethought to give this digitally natives the company right means to interact with the company and the right flair to be part of this company. Technology: Part of the traditional telco service stack has been degraded to commodity status (network layer) where as differentiation happens on the customer facing layer. This layer has to be integral part of the business and the corporate culture, supporting faster, more flexible and sexier services. Opinion Paper 3 Detecon International GmbH Based on the above, it will become clear that for digital telcos doing the same but different approach is not sufficient: To succeed as a digital provider targeting digital natives, Telcos have to understand the paradigm shift from a network driven to software, and service driven organization. Business Set Up Strategy The Way to do business Technology Opinion Paper 4 Detecon International GmbH 2 Introduction Over the top players (OTT such as WhatsApp and Facebook) enjoy increased attention, customer influx and revenue increase, whereas traditional brick-and-mortar mobile carriers struggle to keep their market position. The major differences between the classical telco and the OTT experience lies in the fact, that IT technology is used to offer user-centric frontends, easy to understand and adaptable service offerings, and the use of social medias throughout all channels. With this, the classic network centric features, with which Telco s in the past tried to differentiate, become a commodity (MMS for picture sharing) or even un-chargeable (SMS chat via WhatsApp for free). Over-the-top Player (OTT) Traditional Telco Network centric services Time to market is long due to complex provisioning of new services Complicated value proposition with complex pricing ATL market communication IT centric services, competition is in the frontend systems (e.g cloud based services) Focused value proposition (few services, customized to client) MarCom through social media and communities Qucik turn-around time for new services Very agile to new customer requirements Figure 1: Traditional Telco vs OTT player Disruptive Technology Disruptive technology is The technological changes that damage established companies are usually not radically new or difficult from a technological point of view. They do, however, have two important characteristics: First, they typically present a different package of performance attributes ones that, at least at the outset, are not valued by existing customers. Second, the performance attributes that existing customers do value improve at such a rapid rate that the new technology can later invade those established markets Christensen, Clayton (January 1995). Disruptive Technologies Catching the Wave . Harvard Business Review: P 3. Many Mobile carriers are looking for ways to get their share-of-the-pie and adjust their overall strategy to capitalize on this trend. Many see this as a natural way of evolving in the industry as done in recent years. However, we would like to argue that this trend is less an evolution but more of a disruption. In this sense, companies need a very different approach in order to position themselves as a real OTT player. It is not enough to be part of the social media as an additional communication channel or enter into a price war by adding more and cheaper Opinion Paper 5 Detecon International GmbH products and services in order to counter attack advertisement-sponsored OTTs. What is needed is a whole new strategy: This starts with not only understanding the target customer group but actually being part of them: GiffGaff (see below) called this a Co-creation business model and approach where the brand together with its customer creates the business model, value proposition and providing care and support to its customer. GiffGaff Giffgaff is a Mobile Virtual Network Operator (MVNO) using the United Kingdom O2 network and was launched on 25 November The key elements of the strategic positioning were around addressing technology savvy youth. Its aim was to create a simple, transparent and engaged mobile operator: As part of the service launch a community was set up (technology supported by Lithium). The community together with GiffGaff collaborated to define the product and services. Community members could contribute and present ideas, which were reviewed, rewarded ( gamification) and incorporated into the overall service plan. In return help and support was provided through the community in all care and support questions. This GiffGaff had no inbound call centre (only agents monitoring the community), no below the line marketing and the number of employees are at a minimum (at the start only 14 employees. According to a case study : Traffic: Unique visitors up 40% Buzz: Tweets up 240% Search: Organic search grew 200% Effectiveness: Branded search (e.g. gif-gaf ) increased by 73% Qualified visits: Bounce rate down 10%. Rapid growth in SIM activations Search traffic was still increasing 20 days after the paid-media campaign ended Opinion Paper 6 Detecon International GmbH 3 Don t tell me what is cool Customer pain points In the digital age, many customers have changed their behavior on how they discover or experience a brand, and also the way a brand is interacting with its customer. In the forefront are the so called digital natives, the group of people who grow up with computers, internet and social media. Traditionally we started to identify, analyze and understand this target customer segment. In recent projects we analyze the mood or the particular mindset or emotion of this segment towards the traditional telecoms. In the research, we received answers like billboards are photoshoped (synonym for fake), every interaction takes so much time (synonym for complicated), I don t know where my data volume is going (synonym for dishonest) or don t tell me what s cool (synonym for arrogant or patronizing). In a nutshell, the mood towards or perception of traditional Telco s for this segment is they are fake, dishonest, complicated and arrogant. Traditional Mobile Operators: They are fake, dishonest, complicated and arrogant. So, what are these digital natives looking for? Nearly half of prospect buyers will visit a brand s web page beforehand to help their purchase decision i and if it comes to care and support, also the internet is the first choice. In a recent study by Dimension Data customers were asked which channels they preferred: % of n Internet/ web chat Social media Electronic messaging (e.g. , SMS) Smartphone Application Telephone Don t know GenerationY (born ) 23.9 (1 st choice) 23.9 (1 st choice) 20.9 (3 rd choice) 19.1 (4 th choice) 12.3 (5 th choice) 43.5 GenerationX (born ) 20.6 (3 rd choice) 11.6 (4 th choice) 28.3 (2ndchoice) 11.0 (5 th choice) 28.5 (1 st choice) 41.8 Babyboomers (born ) 7.4 (3 rd choice) 2.1 (5 th choice) 24.4 (2 nd choice) 2.6 (4 th choice) 63.5 (1 st choice) 41.8 Silentgeneration (born1944) 1.8 (3 rd choice) 1.0 (4 th choice) 6.2 (2 nd choice) 0.6 (5 th choice) 90.4 (1 st choice) 43.4 Figure 2: Preferred Communication Channel [DiData] where is figure 2? (figure 2 is up there before figure 3) Opinion Paper 7 Detecon International GmbH Based on this study the trend is clear: For Younger customers (generation Y) internet, chat or social media in the first choice to interact with an organization, and even generation X electronic messaging is nearly as important as the traditional telephone. Studies have also shown (e.g. Gillin 2009) that 78% of consumers trust each other more than they trust advertising ii, which is in line with the findings described above. If we look at the traditional value chain from advertising, exploring, buying, care, support etc. for this generation, it is disrupted by digital means. Online communities catering for this trend: Customers can share their experience and opinion about a brand; and can ask questions and receive expert answers. These experts or influencers do not necessarily associate with the brand and they have been seen either as experts or advisors in their domain through their status in the community. Brands that want to be active in this field don t only have to be part of the discussion but have to manage and steer the discussions and the influencers. Marketers and PR experts have to understand there new challenges: Customer distrust abovethe-line communication, distaste traditional communication channels and optioning of influencer are more important than the marketing message intended. Opinion Paper 8 Detecon International GmbH 4 Guiding principles Brands trying to react to these trends: They enhance their traditional contact centre with a chat client, they show presence in social media to get their message out, or even undergo dramatic transformation projects. However, in a recent blog, Martin Gills iii identified three main reasons why this kind of transformation of traditional brands fails: Brands think it s a technology problem They can t handle large-scale change They think they have all the answers internally In order to overcome these failures, we have developed a set of guiding principles which brands can use during the process of strategy development, business planning and technology design. The guiding principle should help to shift the paradigm from the traditional Telco view towards a truly digital brand. 4.1 Think digital first The first principle seems obvious at the first look but has some significant impact on the overall business and IT design. Here are two examples, but there are many more: Contact Centre If you come from a traditional telecom environment, the inbound contact centre is your first line of defence, meaning that most of the customer inquiries should be handled in the contact centre. Lots of effort is spent on monitoring and optimising agents performance (e.g. first call resolution rate), automate response (by IVRs) or even use it as a marketing tool (e.g. Voice announcements). However, from the target customer point of view, there is no need for a traditional inbound contact centre and to a large extent, the lessons learnt or best practices based on inbound call centres don t even apply in a social media self-help environment. The impact of digital first means no inbound call centre and rather customer -self-care empowerment through digital means. Sales and Distribution If you think digital first for sales and distribution, your classic retail shop is not what comes in your mind but a compressive online shop. Your digital distribution still needs to move physical goods (such as handsets or SIM-cards), but can be realised by a partner network which is digitally enabled: Payment through credit cards, delivery to your house with a comprehensive order management and tracking system etc. If you apply the first principle consequently, it changes your perspective (or your paradigm) how to approach all levels of business design: Digital first will not be an extension of the existing business set up; it will become the business set up. Opinion Paper 9 Detecon International GmbH 4.2 Create a consistent and transparent customer experience: One offer One Customer Experience One process One Screen Digital natives are used to accessing information through multiple channels such as Apps, Web Portals, social media or even kiosks in stores. A digital Telco has to cater for this behavior; and all features and functions should be available across all channels in a consistent way. No hidden features, small prints or complex actions which involve contact centers or even a visit in shops ( for further please visit your nearest store effect). Leading consumer apps are setting high standards for user interface design, and all organizations must master new skills and work with new partners to meet growing user expectations. [Gartner2014] The impact on your strategy is profound: You actually have to start with the user experience design, not end with it. Big IT companies like IBM don t outsource UI/UX anymore, but see it as one of their core capabilities. Gartner in a recent study called Advanced Mobile User Experience Design as one of the Top 10 mobile capabilities in the near future. iv Design agencies give a compressive and inclusive user interface and experience design (UI / UX) which applies consequently to all touch points, and give the customer a consistent and transparent experience. 4.3 Start with the community: where customers share common interest and engage with the Brand As mentioned a number of times in this paper, the community is key for the success of the company. The community can provide more than key elements of the customer experience such as Care and Support. It can enhance the classical marketing function in terms of cocreation of products and services, market communication and promotion. Brand-specific communities enable customers to interact with the organization directly; this level of engagement fosters customer loyalty and influencer becoming effective advocates for your brand. Opinion Paper 10 Detecon International GmbH 4.4 Simplicity and Flexibility: subtracting the obvious and adding the meaningful Many customers complain about the complexity of products offered, interaction with the brand or confusing small prints, but Telcos still claim to have the simplest most transparent offers. Achieving simplicity is a complex task a complex task In a current project, it took the team a number of days, lots of architecture redesign and convincing the business to reduce the customer registration process by one step If customers want to create an online account, even if for information purposes only, in many cases they still have to go through a painful registration process such as defining an account name, typing lots of unnecessary personal information into complex and time consuming screens. Customers easily get annoyed, frustrated and even suspicious about the number of data collected: A one second delay in page response can result in a 7% reduction in conversions v and the common reasons for a customer to abandon the web page are (1) Slow load time (40% of people abandon a website that takes more than 3 seconds to load, (2) forced registration and (3) poor navigation. vi But how do you achieve simplicity? In his book John Maeda s vii, gives a number of laws for simplicity such as: Reduce: The simplest way to achieve simplicity is through thoughtful reduction. Time: Savings in time feels like simplicity. [ ] Operators can achieve simplicity in a number of ways: Reducing drastically the offers (only prepaid). Very few tariffs (instead of call zones, national calls, international calls, on-or-offnet calls etc.) and tariffs which the customer really need ( don t let me pay for Europe if I call only Germany ) However, creating simplicity also implies complexity on another level: In order to enable the user to use existing accounts (e.g.facebook, Google+ etc.), so called single sign on (SSO) an additional application has to connect to most of the business support systems. A change like this can lead to many additional interfaces, change in workflow and changes in the overall security and data architecture, as simplicity doesn t come simple or cheap. Opinion Paper 11 Detecon International GmbH 4.5 Use Gamification The idea of gamification is the use of game mechanics (e.g. scores, batches, rewards) and design in non-game context to impact engagement and outcome (Wikipedia). Gamification can not only play a central role in social engagement platforms to attract and reward customers, but can help to improve the complete customer engagement. It can enhance positive patterns in service use, such as increasing user activity through rewards, foster social interaction, or enhance quality and productivity of actions. How fast can you run? Two men are chased by a lion. One asked the other: How fast do you think we have to run. The other answered: Doesn t matter as long as I run faster than you Success is not absolute but relative to the environment you are operating in. Gartner identified four principal means of driving engagement using gamification: (1) Accelerated feedback cycles, (2) Clear goals and rules of play, (3) A compelling narrative and (4) Tasks that are challenging but achievable. viii In this context, gamification can become a central tool to change the narrative of the brand towards its target customer. Opinion Paper 12 Detecon International GmbH 5 How-to-Guide: Digital Telco In the following chapter we will give you a How-to-guide of designing a digital Telco. We will look at three major domains: Business design: Which business design fulfills the guiding principle of a digital Telco Customer experience design and how to identity your most important customers IT Architecture design: What are the core IT components to support a digital telco. We will use the guiding principles from the previous chapter and apply them to the different domains. It should become clear that following the guiding principles we will end up with a very different look-and-fell Telco, one which is clearly focused on its target customer the digital natives. 5.1 Business design: Mobile Virtual Network
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